Case Results
Gordon & Silber Obtains Summary Judgment for HVAC Contractor in Multi-Million Dollar Construction Defect Case — September 2008.
Type of Case: Construction Defect — Failure to Properly Install Refrigeration Equipment Causing Significant Economic Damages.
Venue: Supreme Court, Bronx County.
Background Facts: This construction defect action was initially brought by the owner of a smoked turkey manufacturer against the architects and engineering firms that designed and supervised the construction of the plant. In turn, the engineering firm brought a third-party action against our insured, the company that was hired by the engineer to do the heating, ventilation, and air conditioning (HVAC) work. The engineer sought indemnification and contribution for our insured's negligence and breach of contract for alleged unauthorized changes to design plans.
Special Problems: Plaintiff's case was potentially in the millions of dollars for lost business and substantive repairs (especially given the Bronx County venue). The danger to our insured, was as much defense costs as indemnity payments. At the time of this writing, there had been 29 days of deposition testimony in the case. Since the testimony involved nearly every aspect of the design and construction of the plant, a small proportion of the testimony involved our client. As such, we merely monitored the depositions and appeared to ask only questions directly related to our client and exit strategy.
Our Strategy:Since the plaintiff's theory against the engineer was for professional negligence, we believed it was doubtful that the engineer's third-party claim against our insured for contribution and indemnity were valid since our insured certainly did not make any engineering decisions. The engineer countered that its theory was that our insured failed to carry out the engineering plans and instructions in a careful and adequate manner.
We argued that even if the engineer was correct, that our insured did not perform its work in accordance with the engineering plans, it had previously entered into a settlement agreement with plaintiffs, accepted a fee reduction and withdrew its mechanics lien in return. As such, we argued that any issue relating to the performance of the insured's work on the project was resolved in the prior litigation. We argued that this would be binding on the engineer, notwithstanding that it had not been a party to the prior litigation. In support of our argument, we invoked New York General Obligations Law §15-108(b), which provides that "a release given in good faith by the injured person to one tortfeasor...relieves him from liability to any other person for contribution."
Result: Bronx Supreme Court Justice Stanley Green, granted our motion and dismissed the case against our insured. The court held that the settlement agreement was unambiguous on its face and that GOL § 15-108 relieved our client from the engineers' contribution claims. The court also found the settlement agreement was fully supported by valuable consideration, including the cancellation of liens and the remittance of payment from plaintiff to our client. It also dismissed the indemnification claim which was not subject to the GOL §15-108(b), on the grounds that it failed to state a claim.
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